This was a 0.3 per cent increase in the rate of growth from the previous month (10.7 per cent).
Strong rate of growth continues…
The rate of growth continues apace into the summer, boosted by home buyers and sellers flooding the market in June ahead of the holiday lull in July and August. This is the seventh month in a row which has seen growth in the region of 10 - 11 per cent, showing a stabilisation in the market following a steady climb earlier in the year. Assetz predicts the rate of growth will slow slightly into the autumn as higher interest rates hit homeowners’ pockets, in the region of a more reasonable 8 per cent.
Dust starts to settle as new PM begins his tenure…
Gordon Brown began his first term as Prime Minister by setting out his intention to release more government-owned land for development, thereby increasing housing supply. While this is ultimately good news for homebuyers, it won’t have a significant impact on the market for many years to come and in fact does not represent an increase in building rate over recent years, rather a reduction. Because the planned increase in housing supply is unlikely to satisfy demand, house prices are likely to continue on their upward course unless there is a major economic shift or interest base rates exceed 7 per cent or more, something very few people think is likely.
Worrying times ahead as the Bank applies more pressure…
Early July brought the third rise in interest rates so far in 2007 as the Bank of England made another hasty bid to communicate a firm control on inflation. Industry experts united in their concern that the MPC is not allowing enough time for its rises to take effect despite significant slowing in the Consumer Price Index. Although the market currently remains robust, the Bank must take a longer-term view if it is to avoid any lasting damage to the economy and must stop trying to make short-term fixes when the base rate is a long-term planning tool.
Average UK house price rises…
The average house price in June 2007, taken from the average price provided by all five major indices is £210,768, up from £209,492 in April. This shows an increase of £1,276 in the value of the average property in the last month and an increase of £21,046 in the twelve months from June 2006, when the average price of a home was £189,722.
Stuart Law, Managing Director of Assetz, commented: “First-time buyers and tenants of rented property are the main losers of another rise in interest rates this month. While costs will increase for buy-to-let investors, landlords are definitely looking to pass these onto their tenants, benefiting from the increased demand for rentals from people who are simply unable to afford a mortgage in the current climate, as well as those who are not yet looking to buy their own property.
“In a month where the industry has looked back retrospectively over a golden decade for property investors under Blair, there is little to suggest a significant downturn in the market under the new Prime Minister. While we expect the rate of property price growth to reduce over the coming months, it looks set to remain buoyant at around 8 per cent, and in spite of Brown’s pledge, the lack of housing supply in the UK’s prime locations means that the health of the market over the next five years or so seems secure, especially with the likelihood of increasing rental income.”
